This is the eighth post in our Nonprofit Innovation Interview Series with senior executives from Children’s Miracle Network Hospitals, which raises $400M annually for 170 children’s hospitals across North America. Today, we’re speaking with Clark Sweat, Chief Revenue Officer.

 

 

 

There are more than one million nonprofit organizations in the United States and Children’s Miracle Network Hospitals in Salt Lake City is one of them. Last year, Americans gave $410 billion dollars to nonprofit organizations like CMN Hospitals and they are constantly on the move, working creatively and strategically to manage and grow a portfolio of $400 million in annual donations for local children’s hospitals.

To learn more about his perspective on sustaining and growing nonprofit revenue, we spent time with Clark Sweat, Chief Revenue Officer, at CMN Hospitals where he has spent the better part of 20 years. Under Clark’s leadership since returning to CMN Hospitals in 2011, fundraising revenue has increased by 77% which equates to nearly $400 million annually.

Clark leads a team dedicated to raising much-needed funds for 170 children’s hospitals in North America. His strategy of focusing on fewer, bigger partnerships and the importance of being relational, not transactional, have led to long-term alliances with companies like Walmart, Target, Costco, Williams-Sonoma, Marriott, RE/MAX, Procter & Gamble, General Mills, Johnson & Johnson, CVS, Speedway, Walgreen’s and Delta Air Lines — resulting in more than $3.5 Billion dollars raised for children’s hospitals and other charities focused on kids’ health.

Q: Why does CMN Hospitals have a Chief Revenue Officer (CRO)?

We’re a little different than most other nonprofit organizations. My counterparts would probably be a Chief Development Officer (CDO) at other nonprofit organizations, but we operate a little differently, however, because we don’t work with traditional donors in the same way as other nonprofits. We felt revenue was a better word to aligns with our business. Our primary goal is to raise funds and awareness, but primarily funds for our member children’s hospitals. Then those hospitals use those funds however they see fit. That is our ultimate metric. We raise $400M annually and approximately $330M is raised in the United States and an incremental $70M is raised in Canada. That’s why we have a Chief Revenue Officer.

Q: How do CDOs perceive their hospital’s relationship with the CMN network?

We offer specialized services for our member hospitals to support children’s hospitals’ donor relationships and brings assets to their foundations that they may not necessarily have in their own shop. They see us as one piece of the development puzzle. We also work with individual donors whether it’s through the Extra Life or the Dance Marathon program. We are touching individual donors as well, but we don’t really look at getting major gifts from someone who can write a check for seven figures and fund a big project at the hospital. We partner with corporate partners who can help us with that kind of revenue, which is another reason why the title Chief Development Officer doesn’t fit for our organization.

Q: How do you stay connected to trends in nonprofit innovation? How do you innovate and improve on programs like Extra Life and Dance Marathon?

Like most people do, we stay closely connected to the industry. We work closely through the Peer-to-Peer Forum, a network of a lot of nonprofit organizations that do P2P fundraising. More often than not, we have our staff participate at their conferences or hosting blogs or webinars where we’re sharing out expertise. We get to also learn from other organizations.

We also work closely with the individual participants of these programs [Extra Life and Dance Marathon]. We want to better understand what their experience is like and we want to know what gets them excited. We want to know why they were motivated to signed up in the first place. We want to understand what keeps them connected to the organization. For some people, they just want to be part of a network of giving and others, want to be part of the impact and some people were just successfully recruited from a friend. Our job is to figure out brought them to us and try and find a way to make the experience positive so they’ll stay with us for the long term.

Q: How have nonprofits like CMN Hospitals and leaders like you had to change your way of thinking around a sustainable revenue model?

The big thing for us, and for everybody including those Chief Development Officers I mentioned, we’ve had to think about diversifying our corporate partner portfolio. If we have too many funds with one partner, we are open to risks if we have too much revenue from a single source. There have been times where we have had too much coming from one particular retailer and we’ve realized that we need to diversify. We didn’t want to do any damage to that relationship and if something were to happen to that partner, it could damage that relationship.

We’re looking for ways to diversify our portfolio. We do that by looking at the types of companies we partner with. We don’t offer exclusivity to partners, but we do offer, and some folks will roll their eyes at this, sensitivity. We don’t approach a partner’s competitor unless we have maximized every dollar we can get out of working with that company. We don’t offer exclusivity, because that’s a difficult thing to do when raising funds for children’s hospitals. We do offer sensitivity and become true business partners with them.

We’ve evolved greatly over the years. We used to offer a 4-week promotion in May, but they wouldn’t do anything until the following years. Our partnerships now are much deeper and we have to demonstrate the impact they’re making down to the individual store level. We spend a lot more time educating employees than we used to and we think what we do works. Most of the companies we work with have been around for an average of 18–19 years, which is kind of unheard of in this space. Most nonprofits have a revolving door when it comes to their partners, but we have been able to have people keep coming back year after year.

Q: Why does CMN Hospitals’ approach to partner revenue management work so well?

I think it’s a combination of the national appeal, we can pull together a national audience, but it’s also a local fundraising effort. Companies like working with the CMN Hospitals brand. People know what the balloon is and that it has something to do with kids. And then when they see that married to their local children’s hospital, it solidifies in their mind what we’re all about.

At the store level, it’s hard to find an employee of any company that can’t tell you a story of how they’ve been affected by a children’s hospital. People have lots of stories. They can understand the children’s story conceptually and in a lot of cases, they have a personal experience. We strive to maintain the public trust that funds go where they’re needed most locally, which is in our case, is unrestricted giving. Those hospital administrators know where to spend the money best. It doesn’t make sense as a national entity to come in and dictate that money needs to go to certain programs or projects when they know their market better than we do. It’s the true combination of national and local efforts that people like and I think that’s what resonates with people.

Q: What are the biggest challenges to sustaining revenue growth and how has your team been working to address them?

There’s a lot. If you think about it, and our hospitals don’t like to think about it this way but it is the reality, we literally have to go out and sign up these partners every year to participate. There’s nothing that we have contractually that they’re going to participate with us forever.

We’re celebrating the 30th anniversary and the one billionth dollar raised with Walmart this year, but next year we need to go out and convince Walmart that this partnership works and that they should continue to participate with us. Since we take that approach and have that mentality, we don’t take any of these partners for granted. We know that we have to continue to add value to demonstrate that we’re good for their employees and their business. We need to earn their business every single day. That’s what has allowed us to grow the partnerships, because the companies do feel like partners with us. They’re working with us on new ideas.

The main challenge is that the face of retail is changing dramatically. Every single day, there’s a new technology being deployed that you can buy your groceries online or have them delivered to your house. You can even walk into a store and never talk to a cashier. Those are the things that impacts our partners’ businesses and their ability to grow.

Thankfully, we have a lot of partners who want us to be part of that business evolution that they’re facing. As long as that’s the case, we will continue to grow with them.

Q: What is the future of nonprofits that have charitable giving at the register?

At the local retail store level, grassroots fundraising has to evolve. You can’t walk into any store without noticing that more and more self-checkout lanes are being put in and there’s fewer cashiers at the front of the store. You can place your order online and they’ll bring it out to your car. The traditional model of having a cashier who is passionate about the cause is shrinking. I don’t think it will ever totally go away and there’s a lot of people who claim that in 10 years, there won’t be any cashiers, I have a hard time seeing that, but who knows. We try to evolve with the use of the technology.

Technology can be great from an executional standpoint. Every single customer gets asked. We have many of our retail partners who, at the end of your transaction, a pin pad will automatically ask, “Would you like to make a donation to your local Children’s Miracle Network Hospital?” From an execution level, you get 100% of people getting asked. It’s relatively simple to hit that “No” button and you can move on so you don’t have to say “no” to a person, but rather the cash register. There’s more education of the cashier needed to make sure they’re asking. You need to know that no matter how small the donation is, it’s going to make a difference.

The retail space is going to change pretty drastically in the next 10 years, but it’s not something I Iose sleep over or worry about because I do believe that inherently, people want to give back and figure out a way to give back to their community. I think they like to be asked. I think they like to be able to say, “Hey I came in here for $20 bucks worth of things for dinner tonight but I also added a dollar to my bill and I feel good about that.” I think as long as that’s the case, there will be a place for charitable giving in the retail environment.

Interestingly enough, it doesn’t affect just us. It affects many nonprofits. We’re actually having some initial conversations with Make-A-Wish right now about putting together a retail summit to pull together some of our top retailers and their top retailers and talk about the next step or the next phase. We could do this on our own, but I don’t think nonprofits collaborate as much as they should. We’re looking forward to partnering with Make-A-Wish on this one and discuss best practices to see where this is going. We think it could help all nonprofits.

Q: Who came up with the idea?

Make-A-Wish came up with the original concept and I’ve worked with several people over there for years. I heard about it through the grapevine and called them up and asked if they’d be interested in doing it together. There’s a group of us in this space who have done this for 20 years. I’ll get on my soapbox for a minute and say that the nonprofit industry is the only industry I know of that’s never gone through a consolidation to gain operational efficiencies.

There were so many grocery stores when I started in the nonprofit space, including 200 individual grocery chains we worked with and now, I think there are 4 or 5 in the country because they’ve consolidated. They’ve gained operational efficiencies and that’s a good thing.

Nonprofits have gone the other way. I think there were 900,000 registered charities when I started and now there are an estimated 1.8 million in the United States. A lot of us have the exact same mission and the exact same goal. If our goal is to provide the social impact we were created for then why don’t we partner?

The reality is, it would be nice to involve more nonprofits than just the two of us, but for now, we’ll see if we can get our sister charities to participate long-term.

Q: Do you see the nonprofit fundraising space consolidating?

It needs to, I’m 100% convinced of that. The reality is that I don’t see it happening in the near future. A lot of times people will form a new charity and a lot of times, it’s because they were impacted by that cause. They may have lost a child for that cause and they want to give back for that cause. They may want to engage the researcher and fund that research rather than have their own charity. In a normal business environment, you’d start consolidating. It doesn’t happen in our world and it’s not setup to consolidate. You’ve got a lot of boards and board members if their brand survives. That makes it difficult, but I do hope it happens. My goal is to find charities to collaborate with and help kids to survive and thrive.

Q: How has nonprofit technology like In Flight become part of your team’s revenue strategy?

For us, In Flight has been a game changer. I care about productivity for hospital fundraisers, but now we can send out the specific activities in a visit to our corporate partners at the national level.

Because of In Flight, our corporate partners really understand the great work fundraising teams are doing at the grassroots level to engage their employees. This is the best corporate partner retention we have. In Flight increases productivity but it has changed the way we speak to partners. It shows how we have the ability to impact our partners’ business and employee culture.

Q: What was your biggest reservation before adopting In Flight?

I don’t know if I had a big reservation, but we had to think about the cost. We knew we needed to do this and needed to figure out how to make it happen, but I wasn’t clear how long it would take to adopt. To some degree, [two years later] we’re still in the adoption phase. We’re putting it in the hands of fundraisers and they’re doing great, but we also have markets that need to do better. The hospitals are supporting their local corporate partners, but aren’t showing it with In Flight.

Q: When you think of charitable giving in the future, what are you most excited about?

One of the things I am most excited by is the corporate partners we work with. Our charitable giving strategy is a mile wide and an inch deep. We want to get really focused. We want to partner with fewer charities and we want to demonstrate the impact we’re making. I love the evolution that is happening, which is sharing the impact with a public audience. We’ve been an organization for more than 35 years and we want you to know you’ve made a difference. Our organization makes the lives of kids better. I want to be part of that.

Q: What is your approach to nonprofit fiscal responsibility?

If you’re not operating fiscally responsibly, you’re not going to be around in the future. I think it’s important that nonprofits realize that. They can’t just exist forever just because they have a good cause.

That’s what gets me on the soap box and figure out how to consolidate. Maybe we’re really good at marketing but this other company so they partner up and share across the organizations. Not sure how to make it happen.

Q: How did you come up with that approach?

I was at CMN Hospitals for 12 years before leaving to work for St. Jude Children’s Research Hospital. In our world, that is a lot like moving from The Coca-Cola Company to PepsiCo. The experience at St. Jude opened my eyes that CMN Hospitals isn’t the only way that nonprofits function.

When I left St. Jude, I managed a nonprofit consulting business for a few years and realized how many organizations are operating inefficiently. During that time, I talked with CMN Hospitals’ current CEO John Lauck about ways we can tackle existing challenges, particularly around partnering with other organizations. It’s taken us [CMN Hospitals] a while to partner with other nonprofits, but I actually train other organizations how to implement cause marketing into their strategic plan and explore ways to become more inefficient.

Q: Do you plan on considering partnerships with other nonprofit organizations?

Yes, I think CMN Hospitals will consider partnerships with other nonprofits and I predict that it will happen in different ways. In terms of shared fundraising, however, I’m not sure. Nonprofit boards can get territorial and tend to struggle with sharing donors. Red Nose Day, which raises funds to end child poverty is a great example of an organization that does a great job engaging a multitude of partners.

This is the eighth post in the Nonprofit Innovation Interview Series with CMN Hospitals. For more information about our team and the work we do with nonprofit organizations, please visit us at www.PwrdBy.com.